brynn? >> rspg, it's a great equal weight of about 25 names. more mid cap than large cap. >> that's going to do it for us. we have "the exchange" starting right now. thanks for watching. have a great weekend. ♪ ♪ thank you very much, frank. and welcome to "the exchange." i'm kelly evans. here's what's ahead with the dow up 48 points this hour. a perfect storm. that's how one of our guests describes the environment for private equity right now. and he says we're not even in the eye of that storm yet. he joins memo men tearily to make his case. the magnificent seven may have been the engine behind the first half market gaps, but our guest says it's time to bet on the underperformers and go fishing in the value pond. he brings three names. >> autos, hollywood, health care, as the labor movement gains steam, we look at the trades to avoid and the companies you may want to buy because of it. it's in a special edition of

"three buys and a bail" today. first, dom chu has the numbers. >> it's green, and decently so. but remember, we're coming off a pretty bad day yesterday and a three-day losing streak for the s&p 500. right now, the dow up 0.1 of 1%. the large-cap s&p 500, broader measure, 4350, up 20 points. roughly one half of 1%. and that trading range for context, up about 27 points at the day's highs. and up about three points of the day's lows. so there is your trading range tilting towards the upper side of things. the nasdaq composite index, really pacing the advance, bouncing off some of those lows, 106 points to the upside. 13,329, the last trade for the nasdaq composite index. another place, of course, we're watching closely related to the tech trade and just about everything else in the markets is the dynamic in interest rates.

long-term bench rates, ticking lower. so bond prices bid to the tune of 4.43%. the cycle high we saw just yesterday was roughly 4.49%, and that's the highest level going all the way back to november, the beginning of november of 2007. so if you look at those long-term yields and just yields overall, they are just starting to back off a little bit, indicating some buying interest. we'll see how long that lasts. and then the hot ipo picture. over the past couple of weeks, we have seen arm holdings on the chip side of things. instacart, grocery delivery, and then klaviyo. those three have been some of the most talked about ipos. i want to put it in context. arm h if you take a look at those, we are hovering near their ipo prices. and arm holdings, kelly, just again for context. at the post ipo highs was up 33%

at one point. if you look at instacart, that was up about 43% at its intraday highs post ipo and up about 31% for klaviyo, as well. so that's how far it went up, and how far it's come down. we'll keep an eye on that ipo market and see whether it says anything more about sentiment in this market. >> i think it tells us quite a lot. dom, thank you very much. stocks may be a little higher today, but they are headed for a negative week, as high interest rates and concerns about a hawkish fed weigh on performance. negative returns have also been weighing on the private equity industry. my next guest says the years long rush into private equity will not end well, because a perfect storm is brewing with rates on the rise. joining me now is dan rasmussen. dan, welcome. >> thank you for having me on, kelly. >> so high interest rates feels like the main culprit, but what else is going on? >> yeah, there are three big

problems in private equity. the first is that about -- most of private equity is leverage, about 60%. almost all of that debt is floating rate. so as rates have come up dramatically, the average interest costs are rising dramatically. the second problem is private equity is 40% plus. technology valuations have been falling, and so as you see multiples coming down, creates an additional problem. and third is the fund-raising. >> so it feeds back into what dom was talking about with ipo performance, doesn't it? >> absolutely. i think the private equity ipos, they come up and their valuations fall. that's not good. the other thing is, even more than what's going on in the public markets, you care how private equity fund-raisers go.

>> private equity, is it fair to say it's been very successful? the zero interest rate world, assets have gone to $4.5 trillion, up 20%, 30% of some pension fund portfolios. there was a warning about some of the public pension funds falling to 2007 funding levels because of their losses in private equity alone last year. >> yeah. you've had a changing story. so pre-the national crisis -- post the financial crisis, outperformance has been basically zero. and the fear is it -- that's comparing it to a very strong s&p 500. my fear is that it could be significantly worse. when you borrow large amounts of private equity, when it was financed at zero, that was

major. but when you borrow at 12%, it's much -- >> i've read for a lot of private equity returns have come from multiple expansion rather than margin growth. it's interesting you say that, because the flip side of this is that leverage loans have been a well-performing asset class this year. while most other interest rate type products are in the red, those investors love this because they offer 12%. these are a lot of corporates that people feel well, maybe pepco or whatever the case may be, these are blue chip companies. i don't know what the argument is, but is the very success of leverage loans the problem for the companies who are now seeing those funding costs rise? >> that's right, kelly. you're never going to get 12%. what ends up happening is that the excess yield is compensating you for the fall. and that default risk tends to

materialize. right now, the single b rate is 8%, 9%. and your lever loans, it's more than 30% plus. [ poor audio ] -- and my fear is that people have gotten acquainted to this low bankruptcy environment and as a result are willing to take risks that aren't prudent when you look at history. >> we have seen critics, everyone from warren buffett and others saying that the smooth nature of the way that private equity funds report hides the real volatility of what's happening with the companies that they own.

>> yeah, that's exactly right. i invest in small caps, which are often a hated sector of the market because they go up and down so much. the volatility is very scary, and people can get really turned off of small caps because the volatility is so high. the average small cap has -- the median market cap for private equity is about $180 million. so these are much smaller than small caps. when you look at the standard deviation, it's about 8%, 9%, which is about investment grade bonds. small caps are about 23%. so you are getting microcaps with volatility that looks like investment grade bonds. when you think about how much people allocate in the small caps, you might say i'm going to put 5%, 10% of my portfolio. private equity is smaller than

small cap and more levered with floating rate debt. >> right. and i want to point out implicit in this is a warning about private credcredit, which is ho lot of these deals get done, and people are concerned about the ultimate fate of these companies. let me ask you this, is there -- is there a, sort of silver lining for -- you know, maybe your typical pension funder would say i would never want a portfolio of microcaps, but maybe they end up benefiting, because in the long stretch of time, more of those companies are successful and they might not meet the risk appetite, but they can deliver strong returns in the long run. i don't know if there would be a case that is good for them to get dragged into this area. >> yeah. and i think, you know, if you look at the classic -- the public equity market, what you find is that large-cap

growth and large-cap value have, over long periods of time, delivered about the same return. small-cap value has delivered a premium of value, but that small-growth stocks have consistently been the worst performers in the market by a large margin. when you buy small companies at very high prices, especially unprofitable companies at very high prices, you tend to be punished for doing so. that's because you have higher bankruptcy rates with small companies, you pay very high prices, because you have high growth expectations. you compare them to amazon, facebook or google, they are great businesses. where if you go down to a $200 million market cap company, you're paying a price the same as amazon. so the result, i look at private equity and say hey, 20 years ago, private equity was providing microcap value.

you could buy a company at lower valu valuation, and that was a good thing for a portfolio. that's why early adopters of private equity earned huge premium returns for doing that in the '80s and '90s. but things have shifted from a value of closure of private equity to a growth enclosure. you have gone from 10% of buyouts being taxed to 40%. and you have gone from valuation multiples that were 40% below public market in the '90s. today, they are significantly above the s&p 500. >> interesting. so this is not the private equity of yesteryear. and it goes to show maybe waiting till growth is large is exactly the strategy. surprising and counterintuitive, although confirmed by the first half performance. dan, thank you for joining us. we appreciate it. >> my pleasure. >> dan rasmussen joining us.

kind of the perfect transition to my next guest who is a small cap value picker. we didn't even do that on purpose. sandy, that's like the perfect pitch for you. >> yeah, absolutely. i mean, we just think that growth has had too much of a run. i mean, last time i was on, i was telling viewers, growth, especially the magnificent seven, time to take some profits and i think just kind of, hitting that point home, listening to powell on wednesday, you know, when he was talking about rates being higher for longer. i think the market totally got it right, selling off tech and watching bond yields pretty much surge to 16-year highs. so we definitely want to be in that value oriented area. there's a lot of opportunity there. >> pool corps, ceasar's, these

are names that you think are interesting or attractive. you know, despite everything that dan just said, i'm sure most viewers go, i just think there's more momentum in growth. look at the track record. >> yeah, and i think people will get their opportunity in growth. i think you're going to see a 10%, 15% correction in a lot of those names. it's just the way the math works with higher rates. they should pull back. in 2022, wasn't too long ago when growth was down 30, 35%. but as far as some of the names i mentioned today are more growth at a reasonable price, opposed to some of the boring value names we have here. when you look at a pool corps, you go back, the only time you could buy it is when there are these macro economic head winds like housing starts. they are tied to new pool construction. so they will have 70,000 pools this year, but that part of the revenue, as far as, you know, new pools related to the company

is only 17%. the majority of their business is just repair and maintenance of your swimming pool. so as long as people don't let their pools turn green or black, every pool built is another annuity. >> so what is the impact of higher interest rates on small caps? after listening to dan, that better be one of the top screeners you are running to make sure you stay away from companies -- i'm sure a lot of these can still do fixed-rate issuance, but still. >> it's definitely an issue. ceasar's, they do carry a lot of debt, all casino companies do. frankly, i think that's what creates the opportunity, because it's been marked down a little bit due to higher rates. so things like that make me, you know, kind of interested if there is a short term blip on something, usually a good buying opportunity. so want to watch out how rates impact everything, and those

that they carry too much debt are going to be somewhat ex exposed. so you want to be careful looking at these companies. >> yeah, do the work is the mantra these days. sandy, thank you for your time. appreciate it. >> thanks, kelly. now, we have had a flurry of fed speak already today. and mary daley and neil kashkari are speaking right now. steve liesman has those headlines. >> kelly, just some headlines from the san francisco fed president, who is saying inflation has been too high for too long, repeating a mantra out there from several fed officials. he says holding rates steady will provide more time for the fed with which to make better policy. inflation she does say is coming down. the labor market is adjusting, rather than abruptly. she is not ready to declare victory until she is confident that inflation is headed back down to target, but adds

patience is a prudent strategy. let me recap. susan collins, a bit more hawkish, expecting rates to stay higher longer, and she goes on to say that further tightening is not off the table. the fed will stay the course, she says, to achieve the fed's mandate. at a recent fed policy statement, saying it should not be take on the mean the fed has reached the peak funds rate just yet. and real quickly, on fed governor bowman, she expects it will be appropriate to raise rates going further than collins, in her language, appropriate to raise rates and hold them at a restrictive level. she says there's contingent risks that energy prices could reverse progress on inflation. she's seen considerable progress on lowering inflation, but, again, inflation is still too high. this last one was interesting. she points out that strong consumer and corporate balance

sheets, along with credit available from non-banking sources. remember, she's one of the banking specialists on the fed. she says that limits the effectiveness of monetary policy on the economy. kelly? >> steve, thank you very much. dow with a 37-point game. see you later this hour, steve liesman. if you are house hunting, not a lot for sale, higher mortgage rates and home prices rising again. let's dig into that last one on prices. we've got some new data. diana olig joins us to explain. just in time, diana. >> just in time, kelly. most of the home price data out there is about one to two months old. a new company is using thousands of housing metrics and of course, throwing in some ai to get prices daily. we've got special access to you and the charts to show you. first, let's go nationally. you see the daily price change up top and year over year at the -- on the right side of the graph, which is up over 5%. so you can see where they dipped

in the heart of the winter, which is seasonal. but the climb higher was seriously sharp in prices this spring. there was a big dip at the start of august, which, go figure, was exactly when the 30-year fixed went over 7%. prices recovered quickly, even with rates still over 7%. the last three we have for that is june, and it showed prices flat after recovering from negative annual appreciation. so let's go local now. denver is currently the hottest market of the major markets, with prices up 19% from a year ago. parcel tracks investors and says for every home that sells there, investors are buying two. that's why prices are going up so much. that is not the case in san francisco, where prices are up just 6% year over year. but have been falling steadily since july. why? because for every home bought by an investor there, four are being sold. and i know you want to see new york city, prices up nearly 18% from a year ago, and still

rising. again, despite these higher mortgage rates. prices are strong due to low supply. we heard the realtor's chief economist yesterday say we need to triple supply before prices can cool. >> that's fascinating. it will be very helpful, as well. not just to gauge home prices but inflation and all the rest of it. you mentioned seasonality. are these daily prices seasonally adjustedsome now >> no, they are not. but what's interesting is that we haven't seen any seasonality since the beginning of the pandemic. i want to show you one more chart, if you will bear with me. you can see from 2020, prices steadily going up and not really any dips in that seasonal adjustment that you would generally see when prices had to get lower in the fall and higher in the spring. the only dip you saw was in 2022, right around april, may, june, and that, of course, is when the fed first started raising interest rates. but now, even with interest

rates higher, again, you are seeing prices climb very quickly. >> diana, thank you very much for bringing that to us. a new metric to track. now, privately owned high-speed railway bright line, you might know it from these plans they have in vegas. they launched a new rail today linking miami to orlando. the first train rolling into miami's station this morning. bright line saying passengers can expect this trip to take three to 3 1/2 hours depending on stops. a trip by car takes four hours. separately, a bright line train was involved in a deadly accident today in delray beach. a pedestrian was hit and killed. joining us now is bright line owner and ceo wes eatens and morgan brennan. quite a day. >> wes, thanks for being with us. a major milestone for bright line. i want to start this fatality. i realize it's under

investigation, but it raises questions when you talk about safety. how are you thinking about that at bright line in terms of infrastructure and operations? >> well, first of all, thanks for having us on. it is a great milestone for us to celebrate today, so that's great. the tragic news this morning is still under investigation. you know, there's really two related issues. one is the issues of just safety, generally speaking. rail transit is the most safe form of transit, period. safer than driving a car or any other form of transportation. so we know we're on the right side of safety as an industry with it. that said, in particular, suicides and self-harm incidents are not just a problem for us, but they're an industry wide issue that exists. it's something we take very, very seriously. there's a lot of issues about mental health, substance abuse wrapped up into those. those are tragic incidents and something we're concerned about. but on balance, when you look at

the safety record of passenger rail travel, it comes out on top. >> our hearts and prayers out to the person this morning in that accident. but, wes, you and i have been talking about, this isn't a ma day for florida and rail advocates. the fact that we are see thing rollout now, this is the first private passenger rail in a century in the u.s., and we haven't seen it before now, because economically, it wasn't viable. what's changed? why now? >> it's been a minute, morgan. it's 100 years since henry flagler's train. since then, we have invented the automobile, the airplane, space travel, cell phones. so what's really happened with rail? rail 100 years ago was the primary form of travel between cities. the u.s. made huge investments in interstate highways and airports. bereally have fallen way behind

in terms of inner city travel. the last 15 years, there's been a massive amount of inner city high-speed rails that have been built around the world. china has 27,000 miles of high-speed rail. the u.s. has zero. so this is a first what i believe of many of these projects now that will work. we know that the economics work inner city. we have had great response to our passenger service in south florida to start. but today in orlando, this is a real milestone. there's not that many milestones in life. the birth of a child, some other notable event. this is a real e notable event for us in the industry. >> and this project between los angeles, las vegas is very exciting. i don't mean to sound ungrateful, but why aren't the trains faster? if you are going to build the tracks and do all this work, why not a bullet train? >> it's totally ungrateful. no, the issue is that basically

when here in florida, we used existing train tracks for much of the route. at the time we owned the railroad to go up the coastline. that's cheaper to do and it's faster to build. but you can't electrify, because those train tracks with freight trains and other customers share those tracks. so we're going to build the train from los angeles to las vegas. you can put a fence around it, so there's no rail crossings. so your safety record will be unmatched. number two, you can electrify it. so it will be an electric train and a green train because we have bought renewable power for it. and then you can operate at very high speeds. 200 plus miles per hour, two hours from los angeles to las vegas. so they're complaining about the one here. it's better than the one they had before. but in the west, you're going to see the first of what i believe will be a flurry of high-speed rail around the country. >> so the florida railroad is a

$6 billion project. vegas to southern california is expected to be $12 billion. regulatory hurdles and also funding. what's the investment case? >> you know, that's really the benefit of what we are doing right here. when you think about you need a right of way in order to build on. you need basically the permits and the authorizations to then go ahead and build. and you need the money to do so. the money to do so is really funded by, you know, an economic case that you know is viable. so what we will have is basically a real proof of concept. we'll have an economic model that we can point to, helping us to get funding for the next trains and for ones in the future. so that's the big, big benefit. once we think we can get to 2.0, then it's off to the races. we know we're viable all over the world. in fact, we're very viable here in the united states, the high-speed rail from washington to new york with this program

that amtrak runs so successfully is a very, very successful program itself. >> yeah. it's profitable, whereas some of the other amtrak routes are not. okay. i've got to shift to infrastructure before we let you go, wes. you have your hand in a lot of things, including energy. we have seen crude move towards $100 a barrel, nat gas has pushed higher, as well. at a time where everybody is focused on the energy complex and what it means for the broader inflation picture, your thoughts? >> you know, i think that it's really an interesting time in the world. it seems that higher interest rates are a challenge. higher energy prices are also a challenge. we're seeing the price of delivered diesel in the markets we operate in is roughly twice as expensive as gas. it makes the case for cleaner natural gas more compelling. but higher energy prices are a concern. while we are in the middle of this energy transition, we want cleaner, cheaper energy, you're

going to have these moments where fossil fuels really do spark up and it seems like we are going through a period like that now. it creates some challenges, including in here and on the roads. >> wes, always great to speak with you. thanks for being here with us on "the exchange." kelly? >> thank you very much. we appreciate it. exciting times. still to come, new york is the new private club capital of the world, with dozens of exclusive members only spots for the rich. coming up, we'll go inside one of these spaces to show you how the wealthy are socializing. take a look at shares of coherent, jumping on a reuters report the company has attracted interest from foreign japanese conglomerates for an investment in its silicon carbide business. 8.5% pop in the shar. hexcng iba after this.

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nine-point decline for the dow jones industrial which has given up its earlier gains and erased an 86-point gain in particular. as we go to tyler mathisen for a cnbc news update. >> thank you very much, kelly. senator bob menendez spoke out against his indictment from this morning, claiming he's been falsely accused of accepting bribes. he was charged this morning for allegedly accepting thousands of dollars from bribes from wealthy businessmen. he's accusing prosecutors of misrepresenting the normal work of a congressional office and said these charges will not distract from his work this the senate. the u.s. is committing $65 million in new aid to haiti to

help local police battle the surge in gang violence there. secretary of state antony blinken urged the u.n. security council to support the de deployment international security mission to aid in haiti. the u.s. will not deploy troops but will support with financial assistance. anthony nesty will be the first black coach at the u.s. olympics next year in paris. nesty is the university of florida's coach and works with top swimmers like bobby fink and katie la decki. he was also the first black male swimmer to win an olympic gold medal at the 1988 seoul games. kelly, back to you. and congratulations to him. >> indeed. tyler, thank you very much. coming up, the broadening uaw strike, economic losses are already estimated to be over $1.5 billion. we'll get the latest on the negotiations and the fallout for the automaker's bottom lines.

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latest on negotiations. phil? >> reporter: kelly, we are at the parts and distribution center in centerline, michigan, north of detroit. m mopar is the distribution center for stellantis and they are now shut down because the workers here are on strike. there are 38 locations between general motors and stellantis. 38 locations with about 5600 uaw members in 20 states. those are now, all of those locations are on strike because the uaw says there's just not enough progress being made with general motors and stellantis. here is the president of the uaw, talking with us about a half hour after walked off the job today. >> we want our members to get their fair share of economic justice, and when you talk about chaos and all that, we have to plan, we have to plan for the worst case scenario, because we know how these companies act, and we know that we planned on

the fact that they were going to screw around and wait till the end like they always do instead of getting serious about our concerns. so we have a plan in place. call it kchaotic, but it's strategic. the companies own this. everything that's happening right now, it's on share shoulders. they chose not to take care of the membership. >> reporter: the major point of contention in these negotiations, not just in the parts and distribution center but at the assembly plants is the elimination of pay tiers, where somebody is hired at this level and it takes a number of years to make it to the top pay level. from the perspective of the uaw, that has to be eliminated. general motors did send a statement after the latest round of walkouts and in the statement, the company said it is working to end the strikes with the uaw, and at the same time, they pointed out when it comes to parts and distribution employees, they have already offered to move them up to the

same level of pay as assembly line workers. as for ford, as you mentioned, kelly, they are not a part of the strikes announced today. there is real progress being made between the uaw and ford. but they still have a long ways to go. kelly, back to you. >> phil, thank you so much. my next guest says this strike can last well into november, given the current levels of uaw strike funds, and its strategy to halt work at targeted plants. out of the big three, he expects ford to reach an agreement first. it has the harmest union membership. gm shares are down 2% since the strike began. dan leavy, i'm sure how well the auto shares have held up. >> hi, kelly. thank you for having me. i think some of the stock price performance perhaps reflects that these stocks were already embedding the impact of the strike. folks have had a sense that there was going to be a strike

for quite some time, and this is now playing out in many ways as people thought. the initial impact, based on this more targeted approach, is perhaps not as bad as what some people feared, and i think there's currently already some impact that's being embedded in terms of ultimate costs that's going to be absorbed. so there is already some of this embedded into the stocks. >> so gm made $10 billion in profit last year, ford lost $2 billion. if they get 1/3 of what they want, the union that is, how much annual profit could we be talking about as a hit to these companies? >> yeah. so on a pretax basis for 2023, gm is looking at something in the $13 billion to $14 billion, ford in the $11 billion to $12 billion range, just to frame the cost for labor, we're talking roughly $6 billion to $7

billion. some of the requests have been doubling that, so if the d-3 gave in on all of the requests, it would be a very significant hit to total profitability. we think that a more reasonable scenario is that there is maybe $2 billion of incremental costs absorbed, and they're likely taking actions to offset that via cost savings or passing that to suppliers. >> so you think this will be resolved with ford soonest. just give us the detail on that, and when we say resolved, do we mean resolved because the workers get more of what they want or does ford have some lef ramg over them? >> you know, the setup for ford is a little different than gm and especially for stellantis. ford is the largest employer of u.s. hourly labor with the d-3. there is a higher percentage of

their manufacturing in the u.s. versus stellantis and gm that rely a little more on mexico. from a financial stand point, ford is a little more disadvantaged than gm, especially stellantis. historically, they have generally maintained better relations with labor that we have seen at the other two automakers. so we have had a sense that there was a better setup. we saw ford reach a deal with canadian workers and the canadian union. so it's not a surprise that we saw there is progress. we think perhaps a reasonable scenario is that in the next week or so, there is full resolution. at the other two, at gm and stellantis, gm, maybe it will take a little longer. our assumption is that a lot of what's going on at this point, there will be some discussion on wages and cola, but another key discussion point, and this is what is different, is product allocation, plant closures. we have seen reports that stellantis wants to close 18

plants, and that's probably a sticking point in these discussions. >> so what would you do if you were the ceo here? >> i think that the automakers are trying to obviously put out offers that reflect the current economic realities. but at the same time, recognizing that there is a long-term transition that they are making. evs, as we know, are going to be generally less labor intense. we know that the economics on evs currently are not attractive. there's also an economic reality that some of the pricing in the market right now may not be sustained. so you look at the street numbers, ford and gm estimates are coming down in the coming years, in part reflecting normalization of pricing. so i think that the offers being put forth by the automakers are likely reflecting some of these realities. >> sure.

of course, at the same time, toyota announced plans to triple electric vehicle production in 2025. so those shares moving higher. much at stake, dan. thank you for joining us. appreciate your time today. >> thank you so much, kelly. if you've got $200,000 lying around, then new york city has a club for you. robert frank is across the river with the details. robert? >> reporter: for those who like to stay above it all, private membership clubs have exploded in size and number across the country, especially here in new york. we're going to give you an exclusive first look inside the king of clubs here in midtown manhattan and tell you how much it costs, coming up after the break. to automate, but if it's using untrusted data can you trust the results? your business doesn't just need ai, it needs the right ai for your business. introducing watsonx a platform designed to multiply output by tailoring ai to your needs. when you watsonx your business, you can train,

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a red week. if you are still in the green from these stocks from the last couple of years and you want to rub elbows with the kardashians and bill gates, you can do that with some of the private clubs cropping up in new york city, for a cost. robert frank has more. >> reporter: kelly, more than a dozen private clubs have opened up here in new york just since the pandemic. this is kind of a new breed of private club where the business elite can socialize, they can work, they can network all outside of the public eye. and that privacy comes at a price. this club across the street here in midtown costs $200,000 to join, and another $15,000 a year in annual dues. these are sort of focused on food and the restaurant experience. then you have, as you mentioned, zero bond, a favorite of kim kardashian and mayor adams. the big question here is whether

all of these new clubs and expensive memberships can survive if the economy turns south. >> everybody in this space is a testament to the vibrancy of the industry. but it will always come down to substance over time. and execution. and core launched in the early 2000s. so we've seen the peaks and the valleys, and we have navigated through all of them. >> reporter: this is the core club, which is going to open mid october. so really coming up. this is the first look inside. this space has three dining areas. we're in the speak easy lounge with a wine library and culinary lab, where celebrity chefs from around the world will come and cook for members. it's got 11 hotel rooms, a spa, a salon. all kinds of thing. the price for core club will be

$50,000 to $15,00,000 to join, d $15,000 a year in dues. they are trying to work through all the new applications that they just started getting. >> so pertinent to the business question and to what's going to happen, how hard, how expensive, what if you want to cancel your membership, how is that typically handled? >> well, i'm not sure about cancellation. they're fairly flexible with people starting and stopping. a lot of people travel around the world, they move around. so if they move around, they can probably suspend the membership. but what these clubs are doing to adapt to that is core club, for instance, they have three clubs, milan, san francisco, and new york. they are opening three to five others in the coming years. soho house, they have dozens of

clubs around the world. they're trying to make it harder for people to cancel based on the fact that they're moving. >> all right. we'll see. like everything is a service these days. if you are wealthy, this is your monthly outlay on top of everything else. robert, thank you very much. it does look lovely there. our robert frank reporting. now a quick market flash on crude oil. drillers cutting oil and gas rates for the first time in three weeks. rig count down 11. crude prices back over $90 a barrel. still ahead, the summer of labor strikes. and now health care workers at kaiser permanente could be next. we'll get the names our trader thinks can weather the turmoil and the most velulnerable one. that's in "three buys and a bail," next. o on them. (vo) trade in any iphone in any condition

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welcome back back. hollywood writers are in the third day of their negotiating table. the uaw partially expanding its strike today as labor disputes hits autos to health care there could be even more walk outs as

contractors expired last week for more than 50,000 culinary workers while 5,000 kaiser permanente workers authorized a strike if this week's bargaining sessions don't end a deal. we're going to take a look in our strike edition in revising the deal today. gina, it's good to see you. welcome. >> thank you. >> your first buy is stellantis, chrysler the -- jeep, we'll just call it the jeep parent company. their shares up nearly 4% since the uaw strike a week ago. bernstein says they've got more inventory but they warn about increased labor costs shaving a euro about eps. why are you bullish here? >> so i'm bullish because if you look at the value for the margin because at the send of the day when you talk about labor strikes you're talking about increasing wages, health care benefits. that's what's on the table here. the biggest margin and the

biggest winner obviously here is tesla, but stellantis actually has a very solid margin compared to both ford and gm. they don't have a ton of debt. so they can weather this storm better, and their brand value is still off the charts. they still own alpha romeo, jeep, maserati, dodge. these are big brands. i think inventory is important when you talk about a strike, talk about people walking out. but this is a company also really, really well-valued compared to a tesla with great margins. and so value for margin this is the best. >> all right, up 36% already up this year, gm down 3%. we'll move onto hollywood, disney, the writer's strike approaching its 150th day and negotiations with those major studios are entering their third. bob iger one of the executives at the bargaining table. but even if a compromise is reached there's concerns. let's talk about this second buy

of yours who is disney. there's concerns about their linear tv business after a charter blackout and concern about how much they're investing in parks, gina. why do you like the stock so much here? >> i think one of the things people are questioning is who has the content, who has enough inventory to weather this strike and who's going to bounce back after. most people are focused on netflix because they have the biggest margins, but disney also has strong margins. and if you look at their investment into parks, parks still remains one of the strongest revenue sources. they cannot raise prices enough yet to even limit park demand, which is impressive. and content-wise, at the end of the day all of this is about content. content is king and disney owns content. this is one you're going to have to play through the longer term. we think disney is extremely

well-priced. obviously the iger whiplash did not help, the mess of spectrum on a big game weekend did not help. all these things are missteps, but we know this is a company with strong brand value and that's going to come through over time. >> quick on our last two, we'll start with your last buy which is in the health care space. which one? >> it's hda. hda is one of these that has a strong enough margin around 11%, actually hda is probably up higher than that in terms of margin, but they're well-priced. and most of these health care companies, hda tenant are bigging big in technology. the issue with health care is demand is limited, so you have to figure out how to provide

that demand with workers that you need. right now workers are the limiting factor, so figuring that out is important. if you look at the health care systems broadly, which most of them are actually nonprofits, they're actually having a really hard time. many small community hospitals are at the brink of bankruptcy. these big systems have a huge benefit because they can invest in technology. >> all right then. that brings us drumroll please, to your sale or the one you're bailing on which is wynn resorts. >> this is a bad -- this sector was really hit in the pandemic. they have not recovered. unlike the auto sector that has largely recovered from 2008 this strike is really going to hit them when they're down. the outlook for even the best of these companies still isn't that great. and you look at wynn, and their outlook is terrible.

i think this strike is going to hit them when they're down and make a bad situation worse. >> i love when you bring us full circle here. we got back to caesars that was a stock pick. gina, thank you very much. that does it for the exchange, everybody. tyler is getting ready for power lunch and ll ji'oin him on the other side of this break to see if stocks can go back in the green again. ing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay. ♪♪ we're not writers, but we help you shape your financial story. ♪♪ we're not an airline,

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(sean) i wish for the amazing new iphone 15 pro! (jason) wesean!citi. do you mean this one - the one with titanium? switch to verizon, you can trade in any iphone, and get the new iphone 15 pro on them. (vo) trade in any iphone in any condition for a new iphone 15 pro on us. only on verizon. hi, everybody. and welcome to "power lunch." coming up the iphone 15 goes on sale today at stores in the u.s. and around the world, and as usual big crowd showed up especially in new york. even tim cook was there. we'll get a live report. plus, the next step in the migration to streaming. live sports, warner bros discovery max announcing the pricing fo